Is Indonesia Serious About Cruise Tourism?

Editorial: Recent Events Prove that Without the Appointment of a Cruise Ombudsman Indonesian Cruising and Yacht Tourism Will Never Set Sail.

(9/22/2008) While a lack of cooperation and a shared vision among the various branches of the Indonesian bureaucracy is hardly news in these parts, the seizure or threatened seizure of foreign sailing yachts during recent visits to Kupang and Bali serves to call into question the Indonesian government's fundamental seriousness of intent in their current drives to encourage yacht and cruise tourism.

Sail Indonesia is an annual yachting event that most recently saw 150 yachts from 15 countries set sail from Darwin, Australia to Batam, an Indonesian island near Singapore.

During the fleet's sail through Indonesian waters, they reportedly encountered several instances in which Indonesian customs officials boarded their vessels and threatened to seize the foreign yachts for failure to post sizeable bonds and financial guarantees. A 2004 regulation demands that foreign visitors must post bonds equal to 5% of the entry fee and 47.5% of the "carried assets" (10% in tax, 30% luxury tax and 7.5% value-added tax) as a guarantee that the expensive yachts will be re-exported at the end of their voyage.

Singular in its severity among competing cruise destinations, the Indonesian custom's bonds could potentially require visiting yachtsmen to theoretically lay out cash bonds ranging from tens of thousands to millions of dollars before being allowed to "visit" the Indonesian archipelago.

In a drive to promote sea tourism representatives of the Indonesian Department of Culture and Tourism have invested heavily in promoting internationally the lucrative yachts and cruise ship sectors, while large sums are being spent on new cruise infrastructure facilities in Bali and elsewhere. These steps to encourage cruising are in stark contrast to the recent moves by the Custom's Department to impose bonds and guarantees that make Indonesia one of the world's least attractive cruise destinations.

The efficacy of the new taxation rules in devastating cruise tourism is hard to deny and can be gauged by the fact that of the 121 participating yachts "welcomed" by customs at the West Timor port of Kupang, apparently only 22 decided to continue their Indonesian journey to the subsequent North Bali port-of-call.

According to Raymond, "aside from other factors including weather, geography, lack of human resources and assistance in marine navigation systems, the biggest problem was the unclear duty regulation." Adding, "in effect, if the race involves 100 yachts with a total asset value of Rp 500 billion (US$54.3 million), the committee will have to provide a collateral of Rp 270 billion. How are we supposed to have that kind of cash?"

Bigger Problems Ahead?

The lack of any kind of coordinated approach to sea-tourism between Indonesia's tourism, customs, immigration, finance and defense agencies destines the cruise sector to remain permanently stunted, despite a fast developing cruise sector in Australia to the South and Singapore to the North.

In the wake of recent problems encountered by visiting yachtsmen, major cruise ship operators who have included Bali and other Indonesian ports on their cruise itineraries must be more than a little nervous that their ships will visited during a coming Indonesian cruise by a uniformed custom's officials demanding a multi-million dollar guarantee be paid before their cruise can continue.

The Solution?

Repeating a call made repeatedly by balidiscovery.com in the past, Indonesia desperately needs a powerful cruise ombudsman able to effectively communicate on a senior level across a large number of government departments and, when need be, directly with the President to make sure that the Country honors its proffered invitation to yachtsmen and cruise operators to "visit Indonesia."

In a country where the jealous protection of power and privilege too often take sad precedence over cooperation for the common good, nothing less will do.